Better Idea: Increase Social Security and Medicare Benefits

As word spreads that President Obama’s budget proposal will call for Social Security and Medicare benefit cuts, other voices are calling for increasing the successful programs instead as the medicine struggling families and a weak economy need.

A report for the New America Foundation highlights the crisis in retirement security and proposes expanding Social Security.

In a Huffington Post column, American Prospect co-founder and Demos Senior Fellow Robert Kuttner writes:

Social Security benefits should be increased, not cut. The share of workers with traditional pensions is down to about 15 percent. The rest either have no pensions or have 401k plans that are not pensions at all. 401k's, like IRAs and Keoghs, are tax-sheltered savings plans. More than half of people between 55 and 64 have no pension and no retirement plan at all other than Social Security.

What we need is an increase in core Social Security benefits, and a second tier of Social Security as a universal, fully portable pension.

For years, pension experts have spoken of the “three-legged stool” of retirement savings: Social Security, employer pensions and private savings. In recent years, however, that stool has begun to wobble, and today, Social Security is basically the only leg holding it up.

The problem, Klein says, is that Social Security is “not generous enough to counteract the sorry state of retirement savings nationwide.”

Because health care costs under Medicare are lower than costs under private insurance, “Medicare, too, can help solve some of our tougher health-care problems,” if younger people were allowed to buy into the program.

As Klein concludes:

It has become common in Washington for wonks and politicians alike to lament the public’s resistance to cutting Medicare and Social Security. But that resistance is there for a reason: These programs work extraordinarily well. Social Security has been wildly successful at raising living standards for the elderly, even as other forms of retirement savings have grown shakier. Medicare is cheaper than private health insurance, and has seen its costs grow more slowly, to boot. We’ve gotten so used to thinking of our entitlement programs as problems to be solved, we’re missing all the problems they can solve.

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